TSX, Dow bounce back as Chinese market remains volatile
North American stocks bounced back on Tuesday, after Shanghai shares slowed their slide and European stocks stabilized.
A day after it suffered an 8.5 per cent drop, the Shanghai share index was down 1.7 per cent to 3663. But the market was volatile, rising one per cent before finishing lower.
The Chinese Securities Regulatory Commision announced in a statement it will continue to "stabilize" the market, indicating that China's leadership is still willing to intervene to prevent a sharper correction in stock prices, which had risen 150 per cent in the past year before selling off since the end of June.
China's market is still ahead 13 per cent since January, but Toronto stocks have wiped out all their gains of this year after trending down in the past month. At the close the S&P/TSX index was in positive territory, up 76 points to 14,077.
The Canadian dollar recovered from fresh lows set yesterday, up half a cent to 77.31.
On Monday, the TSX was dragged lower on the fate of Chinese stocks, but on Tuesday, oil moved higher, helping the Canadian market.
Oil is still lurking below $50 a barrel and Husky Energy turned in a dismal earnings report. However, West Texas Intermediate crude was up 30 cents at $47.69 US a barrel on Tuesday and Brent oil, the most common international contract fell 39 cents at $53.08.
U.S. stocks recover
Anticipation that U.S. oil stocks have grown and a new surge of production from Iraq are keeping oil prices low, with many analysts predicting a fresh glut of crude.
New York stocks recovered from the downturn they suffered Monday because of the sharp slide in Chinese stocks.
The Dow was up 189 points at 17,630, mainly on strong earnings from companies such as Ford Motor Co. and Pfizer. The broader S&P index rose 25 points to 2,093.
Ford reported record second-quarter earnings of $1.89 billion or 47 cents a share, beating Wall Street expectations.
Drugs company Pfizer also beat the street, reporting second-quarter net income of $2.63 billion or 56 cents a share after one-time costs.
Stock analyst John Zechner points out that the U.S. bull market has run for nearly 10 years and many are predicting a correction.
That led to panic selling in yesterday's downturn, he said. Now investors are turning their eyes to the meeting of the Federal Reserve which began today. Many are hoping the Fed statement issued Wednesday will give some clue of when the U.S. central bank will begin raising rates.
